Market Mantra: 11/12/2017 (09:00)
SGX-NF: 10315 (+25)
For the Day: updated: 13:30
For 11/12/2017: Dec-Fut
Key support for NF:
10295-10240/10190
Key resistance for NF:
10325/10350-10395/10425
Key support for BNF:
25200-25100/24850
Key resistance for BNF:
25550-25750/25875
Trading Idea (Positional):
Technically, Nifty Fut-Dec (NF) has to sustain over 10350 area for further
rally towards 10395/10425-10475 & 10535-10575 zone in the short term (under
bullish case scenario).
On the flip side, sustaining below 10325-10295 area, NF may fall towards
10240-10190 & 10150-10100 zone in the short term (under bear case
scenario).
Technically, Bank Nifty-Fut (BNF) has to sustain over 25550 area for further
rally towards 25750-25875 & 26050-26200 zone in the near term (under
bullish case scenario).
On the flip side, sustaining below 25500 area, BNF may fall towards 25200-25100
& 24850 & 24750-24650 area in the near term (under bear case scenario).
As par early SGX indication, Nifty Fut (Dec) may open around 10315, up by almost 25 points on
positive Global/Asian Cues amid higher USD ahead of Fed hike & US tax
reform optimism and domestic optimism about a clean BJP win (?) in GJ this time
despite neck & neck fight.
USD edged higher on Friday on jump in US inflation expectation in the UM-Consumer
sentiment & an upbeat whole sale trade data in inventories report despite a
muted wage growth in NFP, although the headline NFP number was blockbuster.
Market is concerned about US wage growth and not
about absolute employment numbers and thus consistent lack of wage pressure
despite so many “green shoots” in the US economy may compel Fed to go slow in
its rate hikes projections in 2018 and thus USD drops a bit soon after US NFP,
but recovered later on higher inflation expectations in UM-Consumer sentiment.
As rate hike probability by Fed on 13th
Dec is almost discounted now, the question is will it be a dovish or hawkish
hike this time and thus market is confused. Fed may also watch the final shape
of US tax reform & cut and the ultimate tax deficit thereof to plan its
newt course of rate hikes in 2018 and thus may not commit much now, keeping in
mind subdued US wage growth & inflation. Thus, it may be a dovish hike this
time.
Apart from US tax reform & Fed optimism, USD
is also being supported by an immediate aversion of US Govt shut down due to
debt limit issues and Trump’s indication for a bag bang announcement for his
infrastructure spending.
US market surged on Friday on US corp tax cut
optimism and aversion of Govt shut down and the strong job additions in the NFP
headline data is indicating a tighter job market and a “fundamentally strong”
US economy.
Although the real wage growth is muted now, it’s
strong enough for “Goldilocks” types of situations for US economy, which is
supporting the corporate earnings along with the story of synchronized global
growth. A dovish hike by Fed this time may be also positive for US equities
(export earnings) on lower USD and eventually real US wage growth will pick up.
DJ-30 surged by 0.49%; S&P-500 rose by almost
0.60% and closed around 2651, while NQ-100 gained 0.40%; healthcare (M&A
boost), energies (higher oil on upbeat China import data & threat of strike
in Nigeria), banks & financials (BASEL-III optimism of EU counterparts)
& techs helped and basic materials (lower metals on China concern) dragged;
almost 10 out of 11 sectors were in green as the rally was broad based.
US index future (SPX-500) is now trading around
2656, edged up by almost 0.08% on positive Asian cues. Technically, SPX-500 now
has to sustain above 2665-2675 zone for fresh rally towards 2780-2810 area in
mid to long term (2018); otherwise it will correct again and sustaining below
2650-2640 zone, may fall to 2605-2590 zone in the coming days.
Asian market is also in moderate to deep green on
higher USD following global “Santa Rally” on Friday; Japan (Nikkei-225) closed
0.56% and well off the early low, supported by banks & financials (higher
US bond yields, BASEL-III optimism), techs and mixed automakers, exporters
(lower Yen) & energies (oil edged down today after Kuwait oil minister
signalled about June’18 cut-off in OPEC extension, if oil rebalances early),
while dragged by a construction co (Obayashi) over bid-rigging.
China is also in positive (+0.80%) today on
consumer & financials today coupled with net injection of 20 bln Yuan by
PBOC after quite a few days; On the weekend, China CPI & PPI both came
muted, indicating a slower growth as Govt is committed for deleveraging &
quality of growth rather than quantity; China 10Y bond yield still hovering
below the 4% mark today.
HK were also in deep green (+0.90%) following mainland
China trends and also being supported by gaming, casino, techs, insurance &
mixed energy stocks, while new IPO Nissan plunged by almost 9% because of muted
response as the sector (instant noodles) is not “hot” now and the co is not
doing well either in China too!
AU edged up (+0.10%), but off the day high on
slump in Retail Food Gr (media investigation fall out on brutal Franchise
business model); it was also dragged by utilities & health care, while
helped by energy (oil was higher on Friday) and materials (upbeat trade data
from China on Friday).
EU stocks also poised to edge higher on higher USD
and banking optimism about less than expected provisions & capital buffer
from new BASEL-III rules.
Indian Market Is Trading Higher, But Looming RBI
Deadlines For Restructuring Large NPA/NPL May Also Worrisome:
Back to home, Indian
market (Nifty Fut/India-50) is now trading around 10315, edged up by almost
0.23% after making an opening session high of 10341 and so far made a low of
10302 tracking positive global cues and hopes for a clean win by BJP in GJ this
time despite indication of a close fight between NAMO & RAGA as being
revealed by different media & unofficial betting sources.
Apart from GJ election concern, market may be also
in pressure as RBI dead line of 13th Dec is looming on various banks
for submission of a viable restructuring proposal; otherwise they have to show
more provisions (around Rs.1 tln) on some large NPA/NPL cases, waiting for
NCLT/IBC.
The question of “moral hazard” involving back door
entry of default promoters in bidding their own co after NCLT hair cut of 50%
may be another issue, because it can hamper the overall credit discipline in
the system; honest corporate borrowers can feel cheated and they can also think
to default now and later go to NCLT for 50% hair cut on their debts.
On the other side, if old promoters were barred
from acquiring their own stressed assets in future directly or indirectly, then
except some large celebrity stressed assets, it may be very tough to find out
eligible buyers for other numerous small & medium stressed assets.
Also some reports suggesting that China may be
again active in the disputed Doklam border area with India is affecting the
overall market sentiment on fear of renewed geo-political tensions.
Indian Govt may also reduce GST of 18% on
brokerages to 12% (?) vs 15% prior as a part of broader capital market reform
aiming at more participation for small retail investors.
SGX-NF
SPX-500
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